The Effectiveness of R&D and Innovation Policy in Promoting Innovation in European SMEs: an Empirical Investigation of Additionality Effects: A thesis submitted in partial fulfilment of the requirement of Staffordshire University for the degree of Doctor of Philosophy

Innovation is crucial for firms’ growth and competitiveness. Yet, because knowledge is a public good, firms may underinvest in innovation activities to avoid freeriding and opportunistic behaviour. Besides market failures, another cause of underinvestment in innovation is associated with the concept of systems failures, advanced in the literature on systems of innovation. Potential adverse effects of market and systems failures provide scope for government intervention designed to foster investment in innovation and bring about innovation activities at the socially optimal level. This thesis investigates the effectiveness of innovation policy for small and medium-sized enterprises (SMEs) by exploring whether public support has an "additionality" effect on their innovation activities. First, we investigate the impact of public support on innovation output (output additionality) in traditional manufacturing industries. Second, we focus on the effect of innovation support programmes on innovative behaviour, particularly on networking and cooperation for innovation among Spanish SMEs (behavioural additionality). Finally, we assess both output and behavioural additionality among European SMEs.